The answer is that it depends on the individual buying and their goals.  With a refinance right now it can be a great option because if rates are to drop further you can refinance again.  If you plan on holding onto the mortgage for a long period of time then it might make more sense to pay the closing costs.  Keep in mind that nothing is free in life and the catch here it that the interest rate will be higher than if you pay the closing costs on your own.

This is where a Mortgage Professional comes into play and you need to make sure you are being given all of the options available so you as the borrower can determine what is best for you and never have any regrets.

There is no way to know that for sure right now but I feel if you don’t buy sometime this year you will have missed out.  Now it does depend where you are buying because everything is local.  My personal opinion is that now is the time to buy in Fort Lauderdale and the South Florida area.  You need to be sure you are buying in a good area, with good schools, etc. as it’s tough to generalize and say everyone is good to buy because I don’t feel that is the case.

Check out this article from CNNMoney – “Buying a Home Won’t Get Much Cheaper.”

“That could have a significant impact on the market overall in terms of providing a rising floor to home values,” he said.

In some markets hit hard by foreclosures, the turnaround in prices is already underway. Phoenix recorded an 8.4% jump in home prices during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.

“It’s crazy,” said Tanya Marchiol, founder of Team Investments, a Phoenix real estate investing firm. “Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000.”

Miami saw a 4.6% increase quarter-over-quarter through April, andTampa, Fla., was up 4.4%, according to Clear Capital.

Make sure to check out all about VA loans under the VA loan category but I wanted to share with you what KCMBlog.com posted on their site as they did a great job of highlighting VA mortgages:

1. 100% Financing on Home Purchases – Veterans, assuming they are in good standing, can buy a home with no money down. In most cases, the maximum VA loan is $417,000.
2. The Ability to Finance Reasonable Closing Costs – On many VA loans, the closing costs are negotiated into the sales price and the seller pays them. This feature can significantly reduce the cash a veteran needs to buy a home.
3. More Understanding with Regards to Credit Challenges – In an effort to help those who served us, lenders are more liberal towards hiccups in credit.
4. Common-Sense Look at Income – Rather than approve loans strictly by income ratios, VA mortgages incorporate what is called Residual Income. There is a form that actually budgets all expenses (not just housing) to account for family size, heating and electrical usage, and more.
5. Financed Insurance Premium – The VA charges what they call a Funding Fee to set up a fund to reimburse lenders, should a default occur. The Funding Fee varies on loan terms and usage (consult your lender for exact costs), but the good news is that it is typically just added to your loan. Instead of paying thousands of dollars up front, you can pay $10-$50 a month in a higher payment.
6. Refinancing Your VA Loan is Easy – Through the I.R.R.L. (Interest Rate Reduction Loan) Program, getting a better rate (if the market has better rates) does not carry with it all the verifications of income, credit, appraisals, and assets of other loans…and closing costs can be added into the loan! The logic is the VA is already “on the hook” and lowering the payment increases the likelihood of continued payments, so why not be as lenient as possible.

It is so important that when you are working with a Mortgage Professional that you are being given all the different loan options.  If you have been following my Blog for a long time now you would know that I am a fan of a big, long mortgage.   This is now more important than ever as FHA has increased their mortgage insurance premiums.

Did you know that there is borrower paid monthly premiums, borrower paid single premiums, lender paid mortgage insurance, etc?  Did you know that there are different mortgage insurance companies with different premiums?   Most people do not know this and actually most Mortgage Professionals don’t either.

How do you know which one is the best for you?  You can do that by contacting me to see your different options.

I have mentioned this time and time again.  This is one of the many reasons that the interest rates and fees should not be what you are most concerned with.  It is obvious that you want to get a good deal and not be taken advantage of but there are other questions you should be asking when choosing your Mortgage Professional.

We at FEMBi use our own appraisers and rotate them so we are compliant with the appraisal standards.  We are not having the issues the article, “Low-Ball Appraisal: Mortgage Denied” is talking about.

You find the home of your dreams. You’re pre-approved for a mortgage. You’ve scheduled the closing. Then … the appraisal comes in too low and the deal blows up……..

This is the best article I have ever read from Forbes and anyone looking to get a mortgage MUST read this.

“THE PERFECT LOAN FILE“  – here is one paragraph that can occur a lot throughout the loan process:

It all comes down to your proof. If the lender asks for a specific document, give them exactly what they are asking for, not what “should be OK,” – because it won’t be. This is where the approval process tends to go off the rails, when the lender asks for specific documentation and the borrower supplies something else. Here, too, is where both sides get frustrated. So if the
lender asks for a bank statement and there are 5 pages for that bank statement, send them all 5 pages, and not just the summary. If you send them the summary page and they ask again, don’t complain that the lender keeps asking for the same thing when you never sent it in the first place. This may sound elementary, but the vast majority of mortgage approval process woes stem from scenarios just like this.

This goes back to what I have said time and time again but every 1% increase in interest rates reduces your buying power 11%.  This is one of the reasons you are seeing so many articles about why now is the time to buy.

You have to take a look at this chart from KCMBlog.com illustrating the impact of interest rates on your mortgage payment.  Interest rates will go up and when they start to you will see a large increase in a short period of time.

This is a must watch video with Warren Buffett on owning a home.  You can fast forward it to 5 minutes and 10 seconds to hear what he has to say.

The best financial advice you can get is not from a family member, co-worker or a friend. If you want to get good at golf you get someone who is good at golf to coach you.  A billionaire is one of them.

Please make sure to always consult your tax professional and financial planner but I thought the article from CNBC, “Buy Foreclosures With Your IRA,” was very informative and may or may not be right for some.

It may sound risky, but with strong rental demand and relatively little supply of single-family homes, it could be far less risky than the stock market. That’s because your gains are largely coming from rental income, not home appreciation, which is why this works so well in today’s market.

FHA recently announced several changes that will impact underwriting in several areas. These changes are effective April 1, 2012.

For self-employed borrowers: P&L statements are now required if the last business tax return is more than 3 months old; statements must be audited if P&L income is greater than the two year average.

For loans with disputed accounts that receive an “Accept” by TOTAL: These are not required to be referred to a DE underwriter for review as long as the total amount of combined balances (1) does not exceed $1,000 and (2) the dates of last activity are older than 2 years. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with 3 months of payments verified.

For collection accounts: If the total balances of all collection accounts are less than $1,000, the borrower is not required to pay them off as a condition of approval. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with 3 months of payments verified. Judgments must be paid unless payment arrangements have been made and 3 months of payments are verified.

For definitions: The following are now included in the definition of family member for the purposes of Identity of Interest transactions: Brother, Stepbrother, Sister, Stepsister, Uncle, and Aunt.

If you have any questions about these updates, and what they might mean, give me a call or send me an email and I’ll be happy to discuss this or any other pertinent matters with you.